Google has reportedly shot down rumors that it is looking to end its relationship with chipmaker Broadcom Corporation (NASDAQ:AVGO), according to Reuters.
Shares of Broadcom tumbled on Thursday morning after The Information reported that executives at Google, owned by Alphabet Inc (NASDAQ:GOOG), have been in discussions about severing ties with Broadcom as a supplier of artificial intelligence (AI) chips as early as 2027.
"Our work to meet our internal and external Cloud needs benefit from our collaboration with Broadcom; they have been an excellent partner and we see no change in our engagement," a Google spokesperson told Reuters.
Broadcom shares staged a small recovery by Thursday afternoon but were still down 1.6%.
Meanwhile, analysts at Baird believe that Broadcom’s unique custom ASIC and system support capabilities would be “difficult and costly” to replace, as they play a crucial role in assisting OEM customers in resolving hardware system glitches before new device manufacturing begins.
Despite potential shifts, Baird believes Broadcom will effectively retain customers in the long term, maintaining an 'Outperform' rating and a price target of $1,000 on the stock.
“Ultimately, we believe that similar with other key customers, Broadcom will successfully manage customer retention on a long-term basis,” the Baird analysts wrote.